Index falls on worries over cash squeeze
Print Edition
SHANGHAI stocks fell yesterday as some investors worried that signs of monetary easing weren’t strong enough to avoid a possible cash squeeze next month.
The key Shanghai Composite Index shed 0.34 percent, or 6.91 points, to 2,034.57.
The People’s Bank of China yesterday drained 20 billion yuan (US$3.2 billion) from the country’s money market via 28-day repurchase contracts at a rate of 4 percent, according to a statement on the central bank’s website.
The amount was less than the 30 billion yuan pulled out last Thursday and 35 billion yuan a week ago, which was seen as a sign of monetary easing. Last week, the central bank injected a net 120 billion yuan into the market, the most in four months.
“There’s still concern about a cash shortage in June when a large number of wealth-management products will mature,” said Li Zhiping, Sinolink Securities analyst.
China suffered a serious liquidity crunch last June, leading to a 14 percent drop in Shanghai stocks.
Most banking shares fell yesterday. Shanghai Pudong Development Bank dipped 0.8 percent to 9.66 yuan. Huaxia Bank lost 0.8 percent to close at 8.33 yuan.
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